Say I'm short 10,000 shares of SPY and have 10k unrealized long term gains than I don't want to realize.
But I have 5 short puts that are deep in the money and about to expire. I'd rather sell short 500 SPY shares to cover than close the deep itm puts with wide spreads.
Thing is, I already have the short puts covered (I'm 10k shares short). I just don't want to realize my long-term short SPY gains. If I sell short 500 shares on the day of expiration, will this realize my SPY gains? Or would the basis be the 500 shares I shorted on expiration day (3:59pm)? IOW, minimal realized p or l for the 500 short shares.
Edit: Seems like the play would be 5 atm synthetic short right before expiration. market rises, I'll be assigned -500 short SPY to cover my itm puts. If the market falls, then the 5 long puts will cover my itm short puts.
Be saving on the spread difference (atm $.01, .9delta, $.05) with the tiniest of risk to realizing my long term holdings. Is this right?
I'm fudging numbers here. So the spread and realized makes a difference.
Submitted January 13, 2017 at 12:51AM by mjga1984 http://ift.tt/2iqERQ4
